Consultation outcome

Promoting electronic invoicing across UK businesses and the public sector — consultation response

Updated 26 November 2025

Foreword

The government is committed to harnessing the power of digital technologies, with e-invoicing being a crucial tool to streamline core business operations. While e-invoicing technology has been available for some decades and can offer significant benefits to businesses in the form of increased efficiency, improved tax compliance and helping to address late payments, take-up in the UK has been relatively low. A fragmented approach has prevented businesses from unlocking the full benefits of this technology.

As a result, and as announced at Budget 2025, the UK will introduce mandatory e-invoicing for all VAT invoices from 2029. We will work closely with a wide range of stakeholders to ensure robust standards that deliver the full suite of benefits for businesses and small businesses in particular.

In July 2025, the government announced the toughest crackdown on late payments in a generation, tackling one of the biggest barriers to small business growth as part of its plan for small and medium-sized businesses. Increasing the use of e-invoicing will play a key role in addressing this challenge with industry research evidencing a reduction in late payments of 20% upon adoption. This equates to an annual saving of £11,300 for small firms and a boost in labour productivity by 3% in finance heavy sectors. The same research indicates that the efficiency savings of adopting e-invoicing can deliver 2.2 times return to small firms on their investment in e-invoicing over 2 years.

Simplifying invoicing processes can also make tax compliance easier and more accurate, benefiting both businesses and HM Revenue and Customs (HMRC). In many jurisdictions, introducing an e-invoicing mandate has had a significant impact on reducing the tax gap and increasing revenue. Increasing the adoption of e-invoicing and driving greater automation promises to enhance productivity and cash flow, ease administrative burdens and help to collect the tax which is due. As the use of e-invoicing develops it will play a key role in modernising the UK’s business landscape, and understanding the full impact of this transition on businesses of all sizes is essential. 

However, the benefit to an individual business of adoption is limited unless its suppliers and business customers use a compatible system. The full impact of e-invoicing will only be realised when a wide network of businesses adopts using interoperable standards and transmission mechanisms. Without that, potential early adopters are disincentivised and the benefits of adoption are reduced. This government wants to ensure that the growth, administrative benefits and increased revenue, supported by e-invoicing, are achieved optimally. To ensure this, the government have chosen to mandate e-invoicing for all VAT invoices from 2029 and will publish a roadmap to implementing this mandate at Budget 26.

In January 2026, we will launch a period of detailed collaboration with stakeholders to design and develop the UK’s e-invoicing regime. This process will ensure that diverse viewpoints and concerns are embedded in the policy development and reflected in both the roadmap and the full regime. We will work closely with the software sector, including Making Tax Digital (MTD) providers, to ensure that the regime supports the development of a diverse and competitive market offer which provides a range of e-invoicing solutions. If you are interested in participating in or learning more about this process, please contact the policy team. The Department of Business and Trade (DBT) and HMRC will continue to work closely on this initiative to ensure that both the business efficiency and tax compliance benefits are fully realised.

Executive summary

The government extends its sincere thanks to all those who contributed to the consultation ‘Electronic invoicing: promoting e-invoicing across UK businesses and the public sector’ which was published in February 2025 and remained open for response until 7 May 2025. Alongside the consultation, HMRC ran a series of webinars and has conducted extensive engagement with stakeholders.

The government also thanks all those who participated in these exercises. The time, expertise, and detailed feedback provided by respondents have been instrumental in helping assess the potential impacts of different e-invoicing models and in identifying key concerns, opportunities, and practical considerations. This document summarises the responses received and sets out the government’s response and plans for future policy development.

The consultation sought views on how to standardise e-invoicing and encourage its wider adoption across UK businesses and public sector organisations. Contributions from professional bodies, industry representatives, and individual stakeholders have helped to develop a clearer understanding of the benefits of increasing adoption of e-invoicing, how best to realise this benefit and the challenges that may remain for some businesses. We will work collaboratively with stakeholders to overcome these challenges.

Budget 2025 announced all VAT invoices must be issued as an e-invoice from 2029. VAT invoices are typically issued for business to business (B2B) and business to government (B2G) transactions where VAT is due (though not for business to customer transactions). The government is committed to supporting effective digital transformation across UK businesses, requiring all VAT invoices to be issued and received electronically will help to drive this change. To develop a regime which addresses the needs of diverse business communities, we will continue to engage extensively with stakeholders on the policy design. We will publish an implementation roadmap at Budget 2026 to give businesses and their advisors clarity and certainty of what to expect.

What is E-invoicing

E-invoicing refers to the digital exchange of invoice data directly between buyers’ and suppliers’ financial systems, even when those systems differ. This process enables invoices to be automatically integrated into the buyer’s system, reducing the need for manual processing and improving efficiency.

Invoices in the following formats are not considered e-invoices for the purpose of this consultation: invoices in PDF or word formats, images such as JPEG, HTML invoices on a webpage or in an email, OCR or images sent via a fax machine.

Why did the government consult on increasing the uptake of e-invoicing?

E-invoicing technology has been in use globally for over 2 decades, with an increasing number of countries, including Italy, Brazil and Chile mandating its use for certain types of transactions. E-invoicing is used in the UK at present; however uptake is relatively low, and lack of clear standards has resulted in a fragmented market, reducing the benefits of using e-invoicing. Several software providers already provide e-invoicing services in the UK and increased international adoption, particularly in the EU, means that there are more products coming to market which can accommodate a wide range of business needs.

Adopting e-invoicing can help businesses to operate more efficiently, reduce the number of late payments received, and reduce the number of errors that businesses make in their tax returns. As more jurisdictions move to this technology, the UK risks being left behind as standards are developed and businesses in other countries take advantage of the efficiency and productivity benefits it offers. Understanding attitudes to e-invoicing, its potential to improve business processes, and the real and perceived barriers to adoption is crucial for developing the policy interventions required to encourage uptake in the UK.

Who responded to the consultation

The consultation attracted 342 responses in total, from a wide range of stakeholders including businesses, tax advisors and industry representative bodies. Several organisations represented views of their memberships, ranging from 12 to over 5 million. The views of these organisations have been considered accordingly to reflect their role representing their membership. Most respondents were based in the UK, with 259 respondents reporting they were based solely in the UK. 30 respondents reported that they operated in both the UK and internationally, with a further 30 based solely overseas. 

What topics did the consultation explore

The consultation explored the opportunities presented by e-invoicing, while offering respondents a platform to highlight any implementation challenges they currently face and contribute thoughts on how to overcome them. This approach enabled a wide range of stakeholders to share insights on potential barriers and propose constructive solutions, helping to shape a more inclusive, effective, and future-ready e-invoicing framework.

The key areas explored in the consultation included:

• the different models of e-invoicing
• whether adoption should be mandated or voluntary
• the appropriate scope of any potential mandate
• whether e-invoicing should be complemented by real-time digital reporting

Overview of consultation responses

The responses received reflected a wide range of views and highlighted the considerable interest which the consultation generated among businesses, organisations, software providers, and professional bodies. Those in support of e-invoicing cited benefits such as faster payments, more efficient invoice processing, fraud reduction and improved tax and regulatory compliance. The core concerns expressed by those who did not favour mandatory e-invoicing were the potential costs and perceived risk of increasing administrative burdens.

Some respondents also questioned whether e-invoicing was relevant for Small and Medium-sized Enterprises (SMEs). The next stage of e-invoicing policy development will focus on addressing these concerns and ensuring that the e-invoicing mandate, and supporting standards, will enable a range of low cost and easy to use e-invoicing products that are available for businesses of all sizes.

Respondents broadly recognised the potential benefits of e-invoicing, including:

• improved efficiency: automated invoice processing that validates, matches, and routes invoices can reduce manual data entry and human error
• faster approval workflows: digital workflows allow invoices to be approved in real-time, speeding up the payment cycle and improving cash flow
• cost savings: eliminating paper invoices saves on printing, mailing postage costs and storage
• greater transparency: audit trails that log every step of the invoice lifecycle, making it easy to track status and resolve disputes

However, respondents raised potential challenges faced by those wanting to implement e-invoicing including:

• different standards across systems: suppliers and buyers may use different e-invoicing formats (UBL, EDIFACT), making it difficult to exchange invoices seamlessly
• integration challenges with existing systems: many organisations still rely on Enterprise Resource Planning (ERP) software or finance systems that don’t support modern e-invoicing protocols
• unclear policy requirements: suppliers may not understand what constitutes a compliant e-invoice or how to submit it

This indicates a need for better standards to ensure interoperability while protecting flexibility. The government intends to work closely with experts to address these more technical issues and ensure that software providers have clear standards to include when developing e-invoicing products.

A strong view emerged that the greatest benefits of e-invoicing are realised when there is a wide network of businesses all using the technology, with several respondents suggesting that without a mandate there would not be sufficient uptake to realise the benefits of adoption. This would particularly limit SMEs’ ability to take advantage of e-invoicing as they are less likely than larger firms to be able to require that their customers and suppliers accept or provide e-invoices, and consequently not having a mandate may prevent them from being able to use this technology.

These reflections align with government research into e-invoicing regimes in other jurisdictions, where we have found that those without a mandate have generally not achieved significant uptake despite (in several cases) a strong regulatory framework to ensure interoperability and significant government efforts to encourage uptake. From our wider engagement, we understand that in such regimes some businesses have reported that they have been unable to adopt e-invoices or had to run dual e-invoicing and conventional invoicing systems because some of their business customers did not accept e-invoices, disincentivising adoption and harming the productivity benefits of e-invoicing.

Respondents also highlighted the importance of making businesses aware of available support and emphasised that training and education would be a key element in ensuring the successful adoption of e-invoicing. Many respondents recommended that the government considers what assistance could be made available to help businesses transition smoothly to adopt and use e-invoicing.

Many responses highlighted that accountants and bookkeepers would play a vital role in supporting uptake of e-invoicing across UK businesses through their broad reach and client focus by communicating changes and providing tailored support. Professional support already plays a key role in navigating digital tax systems and several respondents highlighted that accountants are already supporting businesses with changes implemented through MTD. 

Responses to questions about the cost and time involved in processing invoices using existing practices varied widely. Some businesses reported near-instant processing at negligible cost, reflecting that they had already implemented a high level of automation in their invoicing systems whether through e-invoicing or adopting other technologies.

However, many respondents reported higher costs, with a few citing figures of £30 to £50 per invoice. In general, smaller organisations using manual systems were most likely to report higher costs. This range reflects the diversity of business models, levels of automation, and technical maturity across UK firms. It also demonstrates that there is potential for significant savings for businesses who reduce the costs of invoice processing, and several respondents expressed the view that widespread adoption of e-invoicing would help to achieve this.

The future of tax administration

The government is committed to ongoing collaboration between HMRC and DBT in developing an e-invoice strategy that supports both economic growth and the tax system. This work supports HMRC’s wider Transformation Roadmap which outlines the department’s ambition to become a digital-first organisation. The roadmap focuses on modernising tax and customs administration, closing the tax gap, and enhancing the overall customer experience. The roadmap also sets out a vision for a thriving innovative software market that makes it simpler for customers to fulfil their tax responsibilities. This approach is underpinned by a commitment to bring the customer, stakeholder and private sector into the development of an e-invoicing strategy through extensive engagement.

1. About you

This section outlines the types of respondents who contributed to the consultation, including those based in the UK and overseas. Responses were received from a range of organisations with operations in the UK and abroad, individuals offering personal perspectives, professional bodies and industry bodies on behalf of their members. Responses reflected a broad range of views across a range of sectors, geographies and size of organisation.

Question 1: Are you responding to this survey as:

• a business
• a representative body
• an organisation
• an individual
• other (please provide details)

Question 2: Are you UK or internationally based? Please provide details.

Question 3: Are the views offered in your responses:

• your own views
• your organisation’s views
• your members’ views

Question 4: Where does your business operate? (please select all that apply)

• England
• Scotland
• Wales
• Northern Ireland
• Isle of Man
• EU – please state which country
• Non-EU – please state which country

Question 5: What is your industry sector (such as accounting, finance, software, retail, construction, other)?

Question 6: To help us determine business size, please provide details on:

• number of employees in your business
• annual turnover
• a rough summary of how your sales are split (Business-to-Customer, Business-to-Business (B2B), Business-to-Government (B2G))

Question 7: How long has your business been operating?

Question 8: Do you use an accountant for your business?

Question 9: Please provide any further information about your organisation or business activities that you think might help us put your answers in context.

Summary of responses

A total of 342 responses were received as part of the consultation. Many respondents provided additional information about their organisation that enabled specific responses to be further broken down based on the following parameters:

• whether the respondent was a business, representative body, organisation, individual or other
• where the respondent is based
• where the respondent operates
• the business’ industry sector
• the size of the business
• the length of time the business has been operating
• whether the business uses an accountant

Respondents by type

Most responses were from businesses. This was followed by other organisations, individuals and representative bodies. The respondent type ‘other’ was used when it was either unclear whether the respondent was operating as a business, organisation, individual or a representative body or it was specified otherwise.

Respondents by business size

One hundred and forty-one of the 203 businesses were SMEs who had fewer than 250 employees and 40 respondents had more than 250 employees. Of the SMEs who responded, 92 were micro businesses (up to 9 employees), 31 were small businesses (between 10 and 49 employees) and 18 were medium sized businesses (between 50 and 259 employees). Twenty-two respondents did not provide sufficient information to determine business size by number of employees.

Respondents by location and area of operation

Two hundred and fifty-nine respondents confirmed they were based just in the UK, with 30 respondents based both in the UK and internationally. Thirty respondents were based overseas. Two hundred and forty respondents also provided additional information of where they operate, with 90% of respondents operating in England, 33% in Scotland, 31% in Wales and 26% in Northern Ireland. Thirty-five per cent of respondents operated in the EU and 30% operated in other non-EU countries. Respondents were able to select multiple regions for area of operations.

Respondents by industrial sector

Three hundred and ten respondents provided information on the industrial sector that they operated in. Respondents were not restricted to selecting one sector and many reported working in multiple sectors. The highest proportion of responses were received from the accountancy, bookkeeping and tax sector (18%) and software sector (15%). The lowest proportion of responses were from the life sciences, education and hospitality and events sectors with less than 1% of respondents stating they operated in each of these areas.

Respondents using an accountant

Out of 255 responses that provided this information, 176 respondents (69%) indicated they use an accountant, while 79 (31%) said they did not.

2. Knowledge of e-invoicing

Understanding current awareness of e-invoicing is important to consider how to increase usage. Most respondents were already aware of e-invoicing and identified as current users reflecting that there is already a population of businesses benefitting from this technology. A small number reported that they ceased use of e-invoicing due to customer access issues and software constraints.

Current users consistently reported benefits such as faster processing, reduced reliance on postal services, cost savings, and improved data accuracy, particularly in high-volume B2B environments. However, experiences varied depending on context and infrastructure, with some finding implementation cumbersome. Those who chose not to adopt cited barriers such as software costs, training needs, disruption to workflows, and limited integration with existing systems.

Understanding the benefits that current users of e-invoicing experience, alongside the barriers to adoption, opportunities to increase these benefits and reasons that businesses have ceased use of e-invoicing is crucial to the development of a robust mandatory e-invoicing regime. We will address the challenges such as lack of interoperability and work with the software industry to support the development of easily available software which works well with existing business solutions.

Question 10: What is your interest in e-invoicing? Are you a:

• potential or current user of e-invoicing
• an e-invoicing service provider
• a tax/accountancy provider
• other (please provide details)

Question 11: Prior to this consultation, were you:

• aware of e-invoicing and a current user
• aware of e-invoicing and a previous user who has since ceased using e-invoicing
• aware of e-invoicing, but chose not to adopt
• unaware of e-invoicing

Question 12: If your business currently uses e-invoicing, when did you implement it?

Question 13: If you are a current, or former user of e-invoicing, could you comment on any benefits or drawbacks you have experienced?

Question 14: If you were previously aware of e-invoicing but have chosen not to adopt, could you explain why?

Summary of responses

Interest in e-invoicing

Respondents were asked to confirm their interest in e-invoicing as either a potential or current user of e-invoicing, an e-invoicing service provider, a tax or accountancy provider or ‘other’. The ‘other’ category was used to capture respondents such as representative bodies whose members may use e-invoicing and consultants, individuals, community bodies, as well as responses that could not be categorised. One hundred and sixty respondents confirmed they were potential or current users of e-invoicing, with 47 stating they were a tax or accountancy provider and 35 stating they were a e-invoicing service provider. Seventy respondents were categorised as ‘other’, whilst 30 provided no response.

Awareness of e-invoicing

The consultation aimed to establish respondent’s experience with e-invoicing prior to this consultation by asking the respondents to answer whether they were:

• aware of e-invoicing and a current user
• aware of e-invoicing but chose not to adopt
• aware of e-invoicing and a previous user who has since ceased using e-invoicing
• unaware of e-invoicing

This was used to establish the level of awareness respondents had of e-invoicing, as well as providing context to their answers later in the consultation

Respondents who chose to share general comments on their stance toward e-invoicing represented a diverse range of groups, including SMEs and industry representative bodies and organisations.

Respondents to the consultation demonstrated a broad awareness of e-invoicing, with 126 respondents confirming that they are current users. One hundred and 5 respondents stated that they were aware of e-invoicing but chose not to adopt and 7 respondents had previously used it but had since ceased. With many respondents outlining their awareness of e-invoicing, their responses provided practical insights on adopting and using e-invoicing, which are explored in further detail below.

A few respondents also provided additional information about why they had chosen not to adopt e-invoicing, providing valuable insight into the barriers which would need to be overcome to encourage and enable higher uptake.

Benefits for efficiency and compliance

Several respondents outlined a range of benefits from adopting e-invoicing which included significant efficiency gains, enhanced automation, faster payment processing, improved compliance, and a notable reduction in errors. The transition to digital platforms also contributed to paper reduction, fraud prevention, and overall digitisation of financial workflows. These improvements reduced instances of late payments, provided quicker transactions which resulted in higher levels of satisfaction among users. In addition to operational enhancements, respondents highlighted strategic advantages such as increased speed, robust security measures, and improved data analytics capabilities.

Many respondents also see e-invoicing as a tool for improving internal governance and investor confidence. They highlighted that use of e-invoicing reduced manual errors, improved data accuracy, and enhanced audit compliance with some international businesses seeing e-invoicing as ‘pivotal’ to the future of trade and digital finance.

One software provider cited research they conducted that found that e-invoicing reduces incidents of late payments by 20%. A reduction in late payments can lead to faster cash flow and improved liquidity, resulting in a four-day reduction in average payment times. These improvements translated into tangible cost savings, reduced administrative overheads, fewer rejected invoices, and long-term financial benefits. The benefits were particularly pronounced in high-volume B2B environments and among businesses already using integrated digital platforms as part of their business administration.

Impact on micro and small businesses

A few respondents expressed concern that introducing e-invoicing would add costs and complexity for sole traders and small businesses.  While it promises greater efficiency and compliance, the transition often requires investment in compatible software, which can be expensive and difficult to integrate with existing systems. However, other respondents pointed to the growing market providing e-invoicing software, and one referred to upcoming research which found that 86% of accountants in Europe would recommend e-invoicing to their small business clients.

Some respondents raised concerns that small businesses, especially those with limited technical expertise, may struggle with the administrative burden of learning new platforms, training staff, and ensuring ongoing support. This can increase reliance on accountants or external consultants, adding further financial strain. Moreover, inconsistent adoption among suppliers and partners can create friction, making it harder for small enterprises to fully benefit from e-invoicing. These responses demonstrate that there is a need for clear standards, consistent adoption and a market providing user-friendly, interoperable e-invoicing solutions to enable businesses of all sizes to benefit from this technology. 

Government response

Adopting an e-invoicing mandate for the UK will ensure that all businesses issuing VAT invoices will be able to benefit from this technology, and that their business customers are not a barrier to investing in tools which will improve their productivity. The UK mandate will not take effect until 2029 and we will publish a roadmap to implementation at Budget 2026.

As part of the process for designing the UK e-invoicing regime we will ensure that there is consideration of the support, both from government and from key stakeholders such as the software sector, that businesses will need in order to be ready for the mandate. We will ensure the timelines for publishing full standards and guidance in advance of the mandate are well understood.

A mandate will help to address the problem of inconsistent adoption among suppliers and business customers. Improved UK standards will ensure that, whichever provider a business selects, they will be able to automatically issue and receive e-invoices when trading with any other UK VAT registered business. While implementing e-invoicing does have costs, not limited to the cost of software, industry research suggests that the time saved by investing in e-invoicing can result in small businesses (with below 50 employees) seeing 2.2 times return on their investment after 2 years. Ensuring that government and key partners, such as the software sector and tax advisors, provide clear communication on requirements, what to expect, and how to find the right supplier will support businesses in adopting e-invoicing and complying with the mandate. The government will work closely with stakeholders to ensure that the right support is in place.

3. Tax reporting

The analysis revealed a broad spectrum of invoice volumes handled monthly across businesses and service providers. Two hundred and fifty-three respondents reported a wide range of monthly invoice volumes, reflecting the diversity of business sizes, sectors, and roles. Respondents reported issuing as few as 1 to 9 invoices per month to millions, with some respondents representing service providers or platforms that process invoices on behalf of large networks or clients.

Question 15: How many invoices (whether paper, PDF, e-invoice or other) do you send and receive each month?

Question 16: What is your average processing time and cost per invoice?

Question 17: Bridging software allows businesses to connect non-compatible software (like spreadsheets) to HMRC’s Making Tax Digital system. Do you currently use bridging software?

Summary of responses

Invoices sent and received

Respondents were asked to give an approximate figure for the number of invoices sent and received each month. Most respondents provided this information and the number of invoices varied dramatically dependent on business size, type and operational role. This ranged from 1 to 9 invoices per month, typically from sole traders or micro-businesses to millions from large organisations.

In addition, many software providers provided additional information on the number of invoices sent and received each month by their customers, users and partners. Larger firms reported sending millions and receiving tens of millions of invoices and one software provider reported that their software would handle a flow of between 500,000 and 1,000,000 invoices a month, highlighting the large volume of invoices that can be processed per month through software designed for such a purpose. There were also several respondents who did not have available data.

Variation in cost and processing times

Responses on the average cost and processing time for invoices varied widely, reflecting the diversity of systems, business models, and that many businesses still use paper or PDF invoicing rather than utilising automated systems. Reported processing times ranged from mere seconds to several weeks, while costs ranged from negligible amounts to over £50 per invoice. Several respondents offered precise figures, others gave estimates, and many indicated they did not measure or were unsure. This variability made it difficult to establish a reliable average.

While not providing a representative sample from which we can generalise across the economy, these responses provide some insight into the efficiency and economic impact of current invoicing practices across sectors. Understanding this baseline also helps us to establish that businesses have the potential to achieve significant savings by improving invoicing practice, including by adopting e-invoicing.

Bridging software

Bridging software plays a key role in supporting HMRC’s MTD requirements. It enables businesses to digitally submit VAT returns by linking non-compatible spreadsheets or accounting systems to HMRC’s systems. Around half of respondents reported that they do not use bridging software, with the remainder split between those who use it and those who did not indicate whether they do or gave general reflections.

Government response

Understanding use of bridging software helps the government to identify gaps in digital capability and tailor support for those who may face barriers to adopting more advanced software solutions. The number of organisations that use bridging software, as well as their type, size and industrial sector provide valuable insight into what tools may be required to facilitate adoption of e-invoicing and ensure that the systems work well together.

The government will work closely with stakeholders in the early stages of policy design to ensure that business needs are understood and that appropriate communication to raise awareness is put in place. Working closely with stakeholders on policy design and announcing the upcoming mandate with several years notice will help to enable stakeholder contributions to the policy design and the development of appropriate communications.

4. Policy objective 

Increased use of e-invoicing is expected to deliver wide-ranging benefits for UK businesses, government, and the broader economy. E-invoicing has the potential to cut invoicing costs between 60% to 80% and reduce manual processing, improving business efficiency. It offers real-time visibility into payments, helping businesses track invoices and improve cash flow, which is vital for SMEs facing the challenge of late payments. E-invoicing reduces reliance on manual inputs for raising and processing invoices, resulting in a reduction of errors and increasing efficiency as well as helping businesses to get their tax right.

Question 18: Do you think there are any other benefits and priorities on e-invoicing that government should focus on?

Summary of responses

Respondents recognised the broader benefits of e-invoicing, such as improved accuracy, cost savings, environmental gains, and enhanced transparency. Standardisation and interoperability were seen as essential for effective implementation, with several respondents expressing support for participating in international frameworks like Peppol and adopting pre-existing standards like EN16931 to ensure cross-border compatibility and reduce administrative burdens. Reflections on standardisation are captured in Chapter 5.

Respondents also stressed the need for flexibility to accommodate legacy systems and avoid fragmented implementation. A coordinated, standards-based approach was recommended to support integration with tax systems and ensure that all data being transmitted through the e-invoicing system can be properly verified. Finally, e-invoicing was viewed as a tool to strengthen compliance, reduce fraud, and modernise financial operations through digital transformation.

Benefits of e-invoicing

Several respondents identified benefits associated with e-invoicing, highlighting its potential to improve accuracy and support broader digital transformation. Many noted that e-invoicing can save time and minimise human error, leading to more consistent and reliable financial processes and cost savings. The potential to achieve environmental benefits through reduced paper usage was also mentioned, with one respondent highlighting research by Aalto University suggesting that e-invoicing can reduce a business’s carbon footprint associated with invoice processing by up to 63%. 

Several contributors emphasised the role of e-invoicing in enhancing transparency, accountability, and fiscal oversight, including improved VAT management to support reducing the VAT gap (difference between the amount of Value Added Tax (VAT) that should be collected by the government based on economic activity, and the amount that is actually collected). Others saw it as a step towards increased digitalisation, referencing the use of AI, automated tax compliance, and smarter supply chain decisions. Overall, e-invoicing was viewed as a catalyst for modernising financial operations and enabling more efficient, secure, and sustainable business practices.

Affordability and accessibility for small businesses

A small number of respondents expressed significant concerns about the cost, complexity, and practicality of e-invoicing for small and micro businesses. Ensuring that there are simple, low-cost solutions available for small and micro businesses will need to be a priority for the development of the UK’s e-invoicing regime. Figures published by New Zealand’s Ministry of Business, Innovation and Employment suggest that average costs of processing an e-invoice are 38% of the average cost of processing paper invoices and 43% of the cost of processing PDF invoices, reflecting significant savings.

Another concern was that e-invoicing might not be able to accommodate industry specific practices and respondents mentioned specific industries that may have particular challenges. This insight will enable the government to engage with those industries to understand their needs and work with e-invoicing providers to ensure that solutions are developed to meet them. Mandatory e-invoicing is already in place in many jurisdictions and HMRC have already been able to confirm that some of the concerns raised about particular practices (including self-billing and the VAT reverse charge) have been addressed in those cases.

Although many respondents felt that SMEs should not be required to adopt e-invoicing, others suggested that a mandatory model for B2B transactions subject to VAT would significantly accelerate e-invoicing adoption and help achieve the critical mass needed for its benefits to be fully realised across business sectors. Without a mandate the benefits would not be realised and there would be less benefit to those businesses that did adopt.

Respondents also reflected that if e-invoicing can work well alongside MTD that would make the adoption process easier since VAT-registered entities are already required to use software to meet MTD requirements. Some small business respondents also highlighted the benefits that mandatory e-invoicing could bring in tackling late payments – a key government priority – and encouraged the government to consider how e-invoicing could facilitate further action in this area.

Compliance and fraud reduction

A few respondents highlighted the potential of e-invoicing to strengthen tax compliance and reduce fraud. Several noted benefits for both HMRC and taxpayers, including improved VAT collection, reduced audit risk, and lower compliance costs. Several pointed to international examples and how effective e-invoicing adoption has been at closing the tax gap in European jurisdictions. Others encouraged HMRC to consider how e-invoicing could integrate with MTD to support improved tax compliance and fiscal transparency.

Larger businesses also highlighted the benefits of invoice data for improving their operations and enabling the use of other technology (including AI) to better monitor and make decisions about their supply chains.

Invoice fraud is a known challenge for many businesses and e-invoicing can help to tackle this by ensuring that invoices can be shared through secure systems and automating anti-fraud checks (for example, by automatically flagging if an invoice requests payment to a bank account not previously associated with that supplier).

Government response

The government will work closely with businesses and their representatives as well as the software sector to ensure that the regime supports the development of a range of products which suit different sectors.

We will consider appropriate security standards for e-invoicing transmission alongside supporting tax compliance. Introducing an e-invoicing mandate will also support ongoing efforts to close the tax gap. In 2023 to 2024, error accounted for 15% of the overall tax gap.  This indicates that reducing errors that occur during manual processes through e-invoicing adoption will help to close the tax gap by making it easier for businesses to get their taxes right.

5. Standardisation

The UK does not currently have a single mandated e-invoicing standard, instead allowing businesses to choose what to use. For public procurement, all bodies covered by the Public Procurement Act 2023 are required to accept e-invoices which comply with BS EN16931 and NHS Supply Chain requires its suppliers to issue e-invoices through the Peppol network. For e-invoicing to deliver maximum value to businesses, interoperability is crucial as it enables invoices to be exchanged seamlessly regardless of the provider.

Standardisation reduces administrative burdens and onboarding costs for businesses, whilst supporting international trade, as more countries adopt e-invoicing frameworks. Businesses need to know that whichever e-invoicing provider they use, they will be able to receive e-invoices from all their suppliers and issue them to any business customers. At present, the UK does not have a regulatory regime which gives this assurance and some businesses use closed invoicing networks or portals, locking their suppliers in to using particular providers.

The consultation explored how standardisation could support adoption of e-invoicing and unlock broader efficiencies for UK businesses. 

Question 19: What data do you think is important for a standard to include, and do you have any preference over the structure of information?

Question 20: Are you familiar with any e-invoicing standards? If yes, what is your preference on what works well and why?

Question 21: Would the UK adopting a single shared standard encourage you to take up e-invoicing?

Summary of responses

Familiarity with e-invoicing standards

Familiarity with e-invoicing standards varied, with a strong correlation to business size; large enterprises were most likely to be aware of standards and micro-businesses least likely. This may partially reflect that larger businesses are more likely to have international operations, and therefore to operate in countries that already have e-invoicing mandates in place.

Simple, harmonised standards

Many respondents favoured a unified UK-wide standard to reduce duplication and promote interoperability, especially across borders. Several respondents considered that with the right support and incentives, a shared standard could help drive broader adoption across sectors even without a mandate. However, the experience of other jurisdictions that have taken this approach suggests that without a mandate uptake remains low, limiting the benefits that businesses realise from e-invoicing.

Harmonised data standards were thought to improve business efficiency, reduce administrative burdens, and facilitate integration with payment systems. Interoperability was seen as essential not only within the UK but also internationally, particularly in the context of the EU’s VAT in the Digital Age (ViDA) initiative. Respondents raised the need for the government designing a standardised template to ensure that all parties can capture verifiable data, such as the VAT invoice number.

Structured data was recognised as essential for fulfilling legal, tax, and audit obligations, with specific emphasis on fields such as VAT numbers, invoice numbers, and digital signatures. Clear guidance on which fields are mandatory versus optional was also seen as important, reinforcing the need for consistent, well-established standards that support cross-border compatibility and reduce implementation complexity.

Views on specific networks and formats

A significant proportion of respondents called for the adoption of common formats that are already in use in the UK and EU, recommending alignment with international frameworks such as Peppol and ensuring system compatibility across borders and platforms. Responses highlighted the importance of using existing solutions to avoid the creation of fragmented or incompatible systems, with Peppol frequently cited as a preferred solution for enabling cross-border trade. 

The Peppol framework was widely praised for its international reach and structured approach, making it a strong choice for interoperability. Several multinational companies, often operating in countries that already have e-invoicing mandates in place, recommended considering the Peppol network on either a four-corner or five-corner model (see glossary for details) which is being implemented in many countries in the EU, as well as more widely including in Singapore, Malaysia and Australia. They viewed Peppol as a network which enables interoperability, provides standardised protocols and formats and has capacity for cross border transactions.

Maximising benefit for users

In addition to international alignment, respondents called for simplicity and consistency in implementation, highlighting the importance of user-friendly software, common data fields, and integration with existing accounting systems to reduce errors and improve auditability.

Several businesses expressed the hope that e-invoicing could be provided by existing third-party software vendors operating in the accounting and MTD space, providing businesses with integrated, compliant solutions which would be embedded into their existing software. This reflects the government’s understanding of current availability of e-invoicing in the UK, where there are MTD providers already offering embedded e-invoicing services.

Balancing harmonisation and flexibility

Although standardisation and harmonisation were widely supported, some respondents highlighted that a level of flexibility may be necessary. Some sectors have specific invoicing needs or may need to transmit additional information alongside invoices, in which case a standardised system may not offer the flexibility required. One respondent recommended introducing Peppol as the default channel for transmitting e-invoices but allowing alternative channels by mutual agreement to retain flexibility and ensure interoperability.

Some respondents suggested that the required balance between harmonisation and flexibility could be achieved by developing modular formats for e-invoicing that can accommodate sector-specific needs and support automation (such models are already in use in some jurisdictions). On such a model, there would be core data fields which all e-invoices would have to include (most likely the fields currently required on a VAT invoice) but there would be optional fields to include more information or provision for attaching accompanying documents to facilitate businesses which find it useful to send more information.

Government response

Having the right standards is clearly important to making e-invoicing successful. The government will develop e-invoicing standards which enable interoperability and balance flexibility and simplicity. This will form a key part of the implementation roadmap. The government will work closely with stakeholders to review the risks and benefits of adopting an existing standard or designing a UK-specific standard. We understand that VAT invoices also act as commercial documents. The work we do on technical specifications will encapsulate designing potential extensions to the standardised invoice to accommodate sector specific needs.

The work will also develop communications and guidance principles to address the needs of different businesses, ensuring business benefits can be realised. HMRC and DBT will continue to work with stakeholders to understand which business groups are most and least familiar with e-invoicing standards, to better tailor support, target communications, and assess readiness for potential policy changes.

For many users of e-invoicing, a detailed knowledge of the standards, underlying transmission mechanisms and file formats would not be needed. In most models of e-invoicing, software providers would provide products which enable a user to easily generate, send, receive and check invoices without more detailed technical knowledge of the underpinning standards.

Understanding the level of awareness of standards and views on them within the UK is essential for developing the UK’s regime and will help the government to design inclusive and effective communications and support. That said, we would expect that many businesses would be able to use a product that has compliance to a standard built in without having to develop their own expertise.

6. Voluntary and mandatory approaches to e-invoicing

Voluntary and mandatory approaches

Countries such as Singapore, New Zealand, and Australia have promoted the use of e-invoicing, setting clear standards and providing significant government communications on the benefits of the technology, but have operated voluntary B2B models (although Singapore and New Zealand are now moving towards mandates for some transactions). Their e-invoicing regimes are supported by clear standards to ensure interoperability, though adoption levels differ by jurisdiction, sector, and business size. In contrast, several countries across Latin America, Asia, and Europe, including multiple EU member states, have implemented mandatory regimes requiring businesses to issue and receive e-invoices for relevant transactions.

Currently, businesses in the UK may choose to use e-invoicing and there is an increasing provision of e-invoicing in accounting or business software packages. However, outside of some narrow areas of public procurement, the government has not provided a framework for wider e-invoicing adoption, and a range of standards and transmission methods are in use. This means businesses may not know whether suppliers or customers will support e-invoicing or utilise the same standards if they do. Therefore, many businesses who want to use e-invoicing might require dual systems, reducing the return on investment.

Question 22: Do you have any suggestions on how the government could support increased adoption under a voluntary system.

Question 23: Do you have any observations, concerns, or recommendations on a move to mandatory e-invoicing for B2B or B2G domestic transactions?

Question 24: If the UK was to introduce a mandate, how long would you need to implement e-invoicing in your operations?

Question 25: What would present a significant barrier to you complying with a mandate?

Summary of responses

Respondents discussed a range of options for encouraging use of e-invoicing. Several respondents took the view that a mandate of some form would be needed to support uptake. Clear policy direction and consideration of whether to phase the introduction of a mandate were also recommended, alongside strong government led training, guidance, and awareness campaigns with suggestions such as sector-specific workshops, and clear instructional materials. Some respondents recommended consideration of financial support for businesses adopting e-invoicing, with suggestions including provision of grants, tax reliefs and affordable software.

One key theme across all responses, whether supportive or against the introduction of a mandate, was the need to provide clear guidance with sufficient lead in time before a mandate takes effect. This was also a key theme that emerged from HMRC hosted webinars and other engagement. Experts and firms operating in jurisdictions which already have e-invoicing mandates highlighted the challenges and potential additional costs for businesses if requirements or deadlines for implementation are moved after initial announcement.

This consideration has been key to the UK’s decision to implement mandatory VAT e-invoicing from 2029, allowing time for the government to work with stakeholders to develop a roadmap and clear standards which can be published in good time prior to the implementation date.

Government support

Many respondents emphasised the importance of government support to encourage adoption, particularly among SMEs. Although financial support of various forms was discussed, this was not the only form of support which respondents felt would be useful. Several respondents highlighted the need for government-backed training, technical guidance, and awareness campaigns to support businesses through transition.

Clear guidance for businesses, tailored to their knowledge and needs, was a repeated theme, and suggestions for delivery of that included webinars, user-friendly guides, pilot programmes, and sector-specific workshops. Another respondent proposed a national awareness campaign which aligns with a broader view of the importance of explaining the benefits of e-invoicing, such as improved accuracy, reduced costs, and time savings.

E-invoicing for business transactions

A significant proportion of respondents supported the introduction of mandatory implementation of e-invoicing for B2B and B2G transactions. Many emphasised that a compulsory regime, rather than a voluntary system, would be essential to drive meaningful adoption, citing international examples such as New Zealand and Singapore. Respondents highlighted the importance of clear government policy direction, legal obligations, and robust infrastructure to support the mandate.

Several respondents suggested consideration of a phased or sector-specific rollout, starting with B2G transactions, to ease transition and mitigate disruption. However, other responses highlighted that some firms have found phased roll outs in other jurisdictions more challenging to comply with than full mandates as a phased roll out increases compliance burdens since it creates a requirement for a business receiving a conventional (not electronic) invoice to check whether the business they receive it from is permitted to issue it, whereas having one date where all VAT invoices must be issued electronically removes this challenge.

While there was broad consensus on the benefits of mandatory adoption, respondents expressed concerns about system readiness, software compatibility, data security, and the risk of resistance or business closures. To address these, stakeholders called for sufficient preparation time, comprehensive guidance and consultation with software providers to avoid disruption. Providing a clear roadmap to implementation and ample notice of the standards and guidance is a priority and setting the implementation of a mandate in 2029 allows sufficient time both for policy co-design with stakeholders and giving adequate notice of a final regime.

Diverse reflections on timelines

Respondents expressed a wide range of views on the time required for implementation of e-invoicing. Many respondents thought that they could implement an e-invoicing system within a year, with the majority of these suggesting that they would only need six months. These respondents included businesses of all sizes from micro to large. A few, generally smaller firms, who had indicated a low level of awareness of e-invoicing, thought it would take them 5 years or more.

This suggests that there is a need to raise awareness of e-invoicing and provide very clear, accessible guidance to help businesses with the adoption process. By setting the date for a mandate in 2029, the government has provided a clear direction of travel and will ensure that awareness raising can begin early. Publishing a roadmap at Budget 2026 will give businesses a clear pathway to implementation enabling planning over several years, in line with the timescales required by the majority of respondents.

Barriers to complying with a mandate

The most frequently highlighted barrier to complying with a potential e-invoicing mandate was cost, particularly for SMEs. Respondents raised concerns about potential costs associated with software acquisition, system upgrades, and staff training. For businesses with low invoice volumes, the investment was seen as disproportionate and unnecessary, while others expressed concern that switching software providers would be both costly and disruptive. The lack of clarity around the long-term benefits of e-invoicing versus its immediate costs further contributed to hesitation, especially among entrepreneurs and resource-constrained businesses.

Beyond direct financial costs, respondents raised concerns about the broader operational impact of e-invoicing mandates. Many cited the need to retrain staff, for onboarding support, and access to low-barrier solutions such as PDF/A formats (specialised version of the standard PDF format designed specifically for long-term archiving and preservation of electronic documents) and email-based invoicing.

The complexity of integrating e-invoicing with existing ERP systems and legacy infrastructure was seen as a significant challenge, particularly for businesses with limited IT capacity. Concerns about cybersecurity, data standards, and system interoperability added to the perceived risk, with some respondents warning that unclear technical requirements and short lead-in times could result in non-compliance.

The government will work closely with stakeholders to design appropriate standards, prioritising interoperability and security. Providing clear requirements and sufficient notice will enable e-invoicing providers to develop a range of available software solutions which can integrate with existing business solutions.

Next steps on developing a mandatory approach

As announced at Budget 2025, the UK will introduce mandatory e-invoicing for all VAT invoices from 2029. A mandate will be required to drive uptake of e-invoicing to a sufficient level for businesses to benefit from the network effects. Respondents to the consultation noted that, in the absence of a mandate, a voluntary model may fail to achieve sufficient uptake across business supply chains, limiting the benefits to businesses and creating complexity with fragmented supply chains.

Support for businesses to adopt e-invoicing and comply with the mandate will form a key part of the implementation roadmap, including ensuring that the UK regime supports the development of low cost, easy to use e-invoicing solutions. Providing clear guidance, tailored for different audiences will also be incorporated into the implementation plan, and we will work with stakeholders across the business community to develop, design and test this guidance, alongside working with experts to develop appropriate cybersecurity protocols, data standards and technical requirements.

We will also work closely with the software industry, accountancy profession, business advisors and representative bodies to ensure that there is a wide range of communication and education available for businesses working towards adoption of e-invoicing.

7. Centralised and decentralised models

The consultation outlined a range of e-invoicing models, particularly setting out the distinction between centralised and decentralised approaches.

In a centralised model, e-invoices are submitted to a centralised government platform for validation before being forwarded to the buyer. This model has been adopted in many countries, including Italy and Chile. It requires significant investment in infrastructure and ongoing operational costs for tax authorities but can offer enhanced real-time visibility of transactions for tax authorities, improving fraud detection and compliance monitoring. It also enables standardisation across industries, reducing complexity in invoice formats and validation processes.

Decentralised models, such as those used in Belgium and Australia allow businesses to exchange e-invoices directly through their chosen software providers. This approach supports interoperability, flexibility, and integration with existing systems, enabling invoices to flow seamlessly between suppliers and buyers. Decentralised models are also more compatible with the UK’s MTD programme and offer potential benefits in terms of business efficiency and tax compliance.

However, without the right standards the model may lead to inconsistent data standards and validation rules across platforms, complicating compliance efforts. Although a decentralised model does not have to enable real time or close to Real-Time Reporting (RTR) of e-invoice data, this capability can be added to a basic decentralised model.

Question 26: Given the information provided and your own knowledge, do you think it is correct for the government to focus on a decentralised model over a centralised model?

Question 27: How would a decentralised 4-corner model impact your business operations?

Summary of responses

The majority of respondents favoured a decentralised e-invoicing model, citing its flexibility, scalability, and alignment with existing UK business practices. The strongest support was received by large enterprises followed by micro and small businesses. The decentralised 4-corner model was praised for its interoperability and compatibility with international frameworks like Peppol and the EU’s ViDA initiative. Respondents valued its ability to integrate with current systems and foster innovation without reliance on central infrastructure.

However, concerns were raised about inconsistent uptake, compliance risks, and technical burdens, especially for SMEs. Some respondents highlighted the centralised model’s advantages in fraud prevention and audit control, referencing Italy’s Sistema di Interscambio (SDI) system. Clear standards, government support, and clear implementation plans were seen as critical to success for any model, as well as better communication to address uncertainty and ensure informed stakeholder engagement.

Decentralised model versus centralised model

The majority of respondents (63%) felt that the government was right to focus work on a decentralised model, with the majority of other responses expressing no opinion on this issue. Respondents highlighted that a decentralised e-invoicing model provides more flexibility, and scalability, as well as being better aligned with existing UK business practices. Respondents noted that decentralisation fosters innovation, reduces reliance on government infrastructure, and enhances operational resilience. A decentralised model also has the benefit of facilitating the development of a range of e-invoicing products, giving businesses the ability to pick a service provider that works for them.

Several respondents saw the model’s interoperability, its ability to integrate with current systems and the ability for businesses to choose the most appropriate software for their operational purposes as critical for ensuring a smooth transition and widespread adoption across diverse business sectors.

However, while the decentralised model was widely favoured, some respondents did highlight benefits of the centralised system with Italy’s e-invoice system cited as a successful example of such a model which requires all invoices to be transmitted through a central, government run platform.

Operational impact on business

Responses reveal a nuanced picture of how a decentralised 4-corner e-invoicing model could impact UK businesses, particularly in terms of operational complexity and cost. Many respondents felt that adoption would bring benefits, such as increased automation, improved efficiency, and reduced disruption, but they expressed concern about the financial and technical burden of implementation. These included the need for system upgrading and integration, retraining staff, and the potential need to manage multiple formats and transmission methods.

Nevertheless, many respondents saw this model as a positive step towards modernising financial operations. One representative body noted that, although there would be challenges to implementation, once e-invoicing was established the reduction in invoice processing time, reduced effort needed to reconcile payments and ultimately prompter payment would deliver real benefits to businesses. 

Respondents highlighted how a decentralised model aligned with existing business processes and its potential to streamline invoice handling without relying on a central authority. Again, respondents noted that successful adoption hinges on clear standards, robust interoperability, and coordinated support from government and service providers. Without these, the decentralised approach could lead to fragmented service quality and increased complexity.

Government response

As stated in the consultation document, the UK has focused its work on understanding how a decentralised model of e-invoicing would benefit the UK, and this position has not changed following the consultation responses. Many jurisdictions that have successfully implemented a centralised model have done so in the context of tackling much more significant tax gaps than the UK’s, which is comparatively low.

The reflections on business process that we received will shape the next stage of our policy development as we design the standards and requirements for a UK mandate.

8. Real Time Reporting and continuous transaction controls (CTC)

Both centralised and decentralised models offer viable pathways for implementing real or near RTR of transactional data to tax authorities. RTR is used in many countries including Hungary and South Korea. These models can automate data transfer from businesses to tax authorities, simplifying tax reporting for businesses and enhancing compliance. In decentralised systems, e-invoices are generated by suppliers, transmitted via their software providers, and received by customers’ systems, with data shared with tax authorities in near real time. Centralised models, by contrast, route invoices through a central platform that reads and verifies the invoice prior to issuing to the buyer.

RTR, whether through centralised or decentralised models, enables tax authorities to better estimate taxable income, detect discrepancies, and identify fraud. It also supports businesses in meeting their tax obligations more accurately and efficiently. Integrating a data feed into HMRC systems could simplify VAT return preparation, enable prompts to reduce errors and support customers to get their tax right first time. It would allow for more targeted compliance activity, reducing the need for compliance activity and visits to compliant businesses. Beyond tax administration, data feeds could improve government understanding to support businesses in the event of a future economic emergency.

As part of our work on designing the UK’s e-invoicing regime, the government will consider the case for introducing some form of RTR. However, this will not be implemented in 2029 but would be implemented once e-invoicing use was well established. 

Question 28: What are your views on an e-invoicing system with RTR for B2B and B2G transactions?

Question 29: Would any additional services support your businesses activity (such as nudges and prompts or potential future use to pre-populate VAT returns)?

Question 30: Thinking about all the models and approaches discussed, which best meets the policy objectives listed at the beginning of the document and any others you may have identified?

Summary of responses

Responses revealed mixed views on RTR within an e-invoicing system. While respondents supported RTR for B2B and B2G transactions, citing benefits such as improved VAT compliance, fraud reduction, and streamlined tax processes, they also raised concerns about administrative complexity, technical challenges, and data privacy. Many emphasised the need for staggered implementation between an e-invoicing rollout and any RTR requirements, highlighting the benefit of first allowing the development of robust infrastructure and widespread e-invoicing adoption.

Suggestions for smart features like prompts, and pre-populated VAT returns were welcomed, though some questioned their relevance and accuracy, noting that e-invoicing alone would not be sufficient to produce a pre-filled VAT return as VAT invoices are not issued for all transactions (including for business to customer transactions). 

Many respondents felt that decentralised models, particularly four-corner or five-corner approaches based on Peppol, would best achieve the stated policy objectives as they provide flexibility and international alignment. A notable number of respondents expressed uncertainty or recommended maintaining the status quo, highlighting the need for clearer communication and inclusive design.

Real-time Reporting

Several respondents expressed support for implementing RTR within an e-invoicing system for B2B and B2G transactions. They saw RTR as a logical and overdue step in the UK’s digital tax evolution, offering benefits such as improved VAT compliance, fraud reduction, enhanced transparency and streamlined tax processes. Respondents viewed it as transformational, particularly if implemented in a seamless and hassle-free way, and aligned with international standards already adopted in countries like Hungary and South Korea.

Respondents also highlighted the potential for RTR to simplify tax reporting and improve operational efficiency. By enabling timely data sharing with HMRC, businesses could benefit from more accurate VAT returns, targeted compliance support, and reduced administrative burden. Respondents emphasised that successful implementation would require clear implementation standards, robust infrastructure, and phased rollout. RTR was seen not only as a tool for improving tax accuracy but also as a foundation for broader digital innovation in financial operations.

A smaller number of respondents raised concerns about the implementation of RTR within an e-invoicing system. The key issues identified included administrative complexity, technical integration challenges, and data privacy risks under GDPR. Many highlighted the potential burden on SMEs and questioned the readiness of both businesses and HMRC to manage real-time data flows. Some expressed concern over excessive oversight and disruption to existing business processes, while others pointed to the cost implications and lack of clear benefits for certain sectors.

Respondents provided examples of how RTR can offer a logical next step from e-invoicing, allowing improved tax compliance, and streamlined tax processes. However, they also highlighted the importance of allowing e-invoicing to become established throughout business supply chains prior to the introduction of any RTR requirement. This would allow businesses time to adapt to e-invoicing requirements and enable government to ensure successful adoption of e-invoicing, before exploring the details of how a RTR regime could work.

Smart features and automation

Several respondents highlighted the value of smart features and automation within an e-invoicing system. Tools such as prompts, pre-populated VAT returns, and AI-powered invoice reminders were seen as beneficial for improving accuracy, reducing manual intervention and streamlining tax reporting. These features were especially welcomed by SMEs, who often face resource constraints. Integration with procurement systems and automation of routine tasks were also noted for enhancing operational efficiency and cash flow management. While support was significant respondents raised concerns about data reconciliation and the relevance of these tools for complex or partially exempt businesses. A few noted that existing software already provides similar functionality.

Respondents also highlighted concerns about the accuracy of pre-populated VAT returns, especially for businesses with complex tax arrangements such as partial exemption or bespoke contracts. They warned that automated data might not align with internal records, potentially leading to incorrect submissions. Respondents also flagged that e-invoicing data would not be sufficient to generate a pre-populated VAT return. VAT invoices are not required for business to customer transactions so this significant element would be missed.

Government response

The government will continue to explore the potential benefits of RTR but will not introduce it alongside the e-invoicing mandate in 2029. If RTR requirements are introduced at a later date they will build on e-invoicing infrastructure with the objective of making this reporting as seamless as possible for businesses. As part of this work, HMRC will also examine how it could utilise, protect and store such data in a safe, proportionate manner and use it to enhance both compliance and customer service activity. Any next steps on RTR will align with HMRC’s Transformation Roadmap commitments to adopt more innovative and joined up systems.

The government recognises that e-invoicing data alone would not be sufficient to provide a pre-populated VAT return, though e-invoicing data might be helpful to feed into such a product should it be developed in future.

9. Support and engagement with business

The government recognises that working closely with businesses is essential to developing an effective e-invoicing policy. Successful international examples have shown that collaboration between government and industry helps ensure the right support and communications are in place and that realistic timelines are introduced.

As the UK progresses with standardised, mandated e-invoicing from 2029, the government will continue to engage with businesses and representative organisations to develop a viable system that delivers real benefits. This includes working with software and accounting sectors to develop the right approach for the UK. Ensuring that stakeholders can feed in at every stage of the policy process is central to the approach which we will take to developing the e-invoicing regime and ensuring that it delivers benefits to UK businesses.

Question 31: If the government was to move towards one of the discussed options, what support would be needed and how would that change between the different approaches?

Summary of responses

Responses reflected a wide range of perspectives and experiences.  A significant number of respondents expressed a need for financial support to help small and micro businesses adopt e-invoicing, with many citing costs related to training, software, and migration. Clear communication, and early, practical guidance was seen as essential for successful implementation and responses urged government to publish a roadmap and consult widely.

E-invoicing was recognised for its potential to improve efficiency, reduce fraud, and enhance compliance whilst standardisation and international alignment were highlighted as key to reducing complexity and supporting cross-border trade. For reflections on standardisation, please see Chapter 5.

Financial and resource support

Many respondents requested consideration of the provision of financial support to enable adoption of e-invoicing. They highlighted the costs associated with training, software, hardware, and the disruption caused by migration to a new system. Without such support, respondents feared that many small businesses might face operational challenges.

In addition, respondents raised concerns about the affordability of mandatory e-invoicing and its disproportionate impact on small and low-invoicing businesses. Many highlighted that the financial and technical issues could place undue pressure on micro-enterprises and some suggested that e-invoicing should only be required for businesses with turnover above a certain threshold.

Other respondents highlighted that adopting e-invoicing can bring significant savings to businesses, with one respondent sharing research showing that adoption can save small firms £11,300 annually.

Clear communication, education and guidance

Many respondents highlighted the need for effective government communication and consultation. Respondents consistently emphasised the importance of clear, timely, and accessible guidance from HMRC, DBT and other government bodies. This includes early publication of implementation timelines, detailed documentation, and strategic roadmaps to help businesses prepare adequately. Stakeholders also called for proactive engagement with professional bodies, industry representatives, and SMEs to ensure that the system is designed collaboratively and reflects the diverse needs of the UK business landscape.

Many respondents highlighted the need for consistent messaging and public awareness campaigns to build confidence in the e-invoicing rollout. Participants recommended transparent communication channels, feedback mechanisms, and the involvement of trusted intermediaries like accountants and trade associations. These measures are seen as essential not only for fostering trust, but also for ensuring widespread and equitable adoption of e-invoicing across sectors.

Government response

The government will carefully consider these views as we progress into the next phase of e-invoicing design, including ensuring that the policy considers the needs of specific business sectors and invoicing arrangements. Our aim is to develop a framework that delivers tangible benefits to businesses whilst also strengthening the UK’s tax system.

This will include working closely with both businesses and software suppliers to ensure the development of a diverse and competitive market offering affordable e-invoicing solutions that meet the needs of all businesses as well as ensuring that the right regulatory framework is in place for software providers to support this provision.

As e-invoicing will be mandated for VAT invoices, many of the smallest businesses who are not required and choose not to be registered for VAT will not be obliged to adopt this technology. The experience seen through the roll outs of MTD for VAT and Income Tax indicate that the market will provide solutions at a range of price points, including some low-cost products that are currently used by small businesses. We are aware of several MTD providers focused on the small business market that are already able to provide e-invoicing services.

We will also test communication approaches to explore additional routes of support and to ensure that businesses receive all the information they need to implement e-invoicing and comply with the mandate from 2029.

10. Further developments

Stakeholders identified business readiness, cybersecurity, data protection and infrastructure as key priorities for successfully increasing the use of e-invoicing in the UK. They also shared views on existing e-invoicing networks and standards, as well as on which international standards it might be helpful for the UK to align with. Respondents recommended that the government should continue to engage with all stakeholders to enable co-design of the UK’s e-invoicing regime.

Stakeholder input will help shape practical solutions that reflect the diversity of UK businesses and their operational realities. Lessons from international models will also be considered to inform best practice. HMRC and DBT remain committed to working collaboratively with stakeholders and across government to ensure that e-invoicing delivers benefits for both businesses and the UK tax system.

Question 32: Are you content for us to contact you if we have any questions about your response?

Question 33: Are there other technical issues which you think we should look at further?

Question 34: Is there anything else you would like us to be aware of relating to a potential future UK policy on e-invoicing?

Summary of responses

Respondents strongly favoured introducing a national framework for e-invoicing, aligned with international standards like Peppol and the EU’s ViDA to ensure interoperability and reduce regulatory divergence. A decentralised model with RTR and tax clearance was seen as key to improving compliance and transparency. Clarity on scope, including B2B, B2G, and cross-border transaction was essential, alongside early engagement with software providers and industry bodies.

While e-invoicing offers long-term benefits such as reduced costs, improved accuracy, and enhanced efficiency, successful implementation will require addressing concerns around affordability and readiness, especially for SMEs. Cybersecurity, GDPR compliance, and robust infrastructure were highlighted as critical, with calls for national standards on digital identity and data handling. Emerging technologies like AI and machine learning were seen as enablers of innovation and resilience. Respondents also sought clarity on penalties and fraud prevention mechanisms. A strategic, inclusive approach was recommended, with pilot programmes and co-design to ensure practical implementation.

The overwhelming majority of respondents expressed a willingness to be contacted, with only a very small minority opting out.

Data security and technical infrastructure

Cybersecurity and technical infrastructure emerged as a major theme, with a significant number of respondents particularly concerned about potential vulnerabilities in real-time data transmission and the need for GDPR-compliant data handling. Respondents encouraged future engagement on the detail of cyber security requirements so that they can provide technical analysis.

Respondents called for a national framework for digital signatures and identity management to ensure authenticity and integrity of e-invoices. They also flagged the complexity of automating VAT exemptions and reporting, and the need for clear validation rules, error handling protocols, and dispute resolution mechanisms. Respondents emphasised the importance of transparency in how data will be stored, shared, and used, particularly in sensitive sectors like legal services and healthcare.

Emerging technologies such as AI, and machine learning were identified as potential enablers of future innovation, offering opportunities to enhance security, automate processes, and improve overall system efficiency. In addition, the need for a resilient and secure technical infrastructure was highlighted, to support e-invoicing at scale raising concerns about compatibility with legacy software and the risk of single points of failure, especially for high-volume platforms.

Working with stakeholders to develop our approach on these issues and test potential solutions will form a core part of the policy development process that we will use to develop the UK’s e-invoicing regime.

International alignment and implementation

Several respondents highlighted the need for a clear framework for e-invoicing, underpinned by robust implementation timelines. Aligning UK policy with international frameworks such as Peppol and the EU’s ViDA initiative, to ensure interoperability and reduce regulatory divergence was advocated. Respondents also endorsed a decentralised model alongside RTR and tax clearance mechanisms to enhance compliance and transparency.

Clarity on scope, including B2B, B2G, and cross-border transactions, was seen as essential, with calls for government to engage early with software providers, professional bodies, and industry groups. One representative body flagged the importance of not creating new obligations to issue VAT invoices as this would significantly increase the challenge of implementing e-invoicing for their members.

Cost and accessibility

Many respondents highlighted that the transition to digital systems, particularly e-invoicing, presents significant long-term benefits for small businesses. These benefits include improved compliance, enhanced accuracy, and greater operational efficiency. They explained that automation can drastically reduce the high costs associated with manual invoicing, so with the right support such as free software, pilot programmes, and guidance, small firms can overcome initial barriers and realise substantial productivity gains.

Despite the potential advantages, concerns remain around affordability and readiness, particularly for sole traders, micro-businesses, and those operating in low-tech or rural environments, particularly if broadband access is limited.

Compliance, penalties and fraud prevention

Respondents highlighted that there would need to be clarity on the compliance framework, focused on the nature and scale of penalties for non-compliance. There was interest in whether penalties will mirror those under MTD or take a different form. Fraud prevention, through the payment of falsified invoices was also highlighted by respondents as a driver for e-invoicing adoption. One large business highlighted a significant proportion of SMEs in the UK have, at some point, paid a fraudulent invoice and that e-invoicing can help to reduce this form of fraud by providing businesses with real time data and reconciliation.

Many respondents also identified, or were aware, that e-invoicing could reduce the VAT tax gap. VAT reporting and availability of real time, or near real time data increases the difficulty of underreporting income. Some respondents highlighted the success of Italy’s e-invoicing regime, reported to have generated €6 billion annually in additional tax revenue.

Engagement and collaborative design

Several respondents highlighted the need for government to continue engagement with software providers, representative bodies and trusted stakeholders to ensure successful implementation. They emphasised the importance of co-designing the system with those who will use and support it and learning lessons from MTD by engaging early and setting a clear, fixed implementation timetable well in advance.

Respondents recommended early and ongoing consultation to shape a practical, inclusive framework. This should include sandbox environments and pilot programmes to test functionality, identify issues, and refine the system before full-scale rollout.

Strategic vision

Several organisations and governing bodies advocated for a strategic, globally informed approach to e-invoicing. A leading organisation provided the results of their survey of 9,000 businesses that revealed that e-invoicing can reduce late payments by 20%, save small firms £11,300 annually, and boost labour productivity by 3% in finance heavy sectors. This demonstrates its potential to drive digital transformation. Another large organisation highlighted the economic considerations of implementing future e-invoicing policy, sharing views on the importance of e-invoicing on continued trade with the EU and keeping pace with countries globally.

Government response

Ensuring that systems are interoperable, secure, and accessible will be a key focus of the stakeholder engagement which will start in January 2026. We will also consider the development of e-invoicing mandates across different jurisdictions and how the government recognises the needs of businesses operating internationally and welcome input from those with experience of operating under these systems.

By announcing that the mandate will take effect from 2029 and working closely on policy design with stakeholders, the government will ensure that businesses have clarity on the policy direction, opportunities to contribute to policy design, and that the final guidance and standards can be published well ahead of the mandate taking effect. This work will feed into the roadmap to implementation which will be published at Budget 2026 and continue through the development of standards.

11. Conclusion

Many respondents were aware that e-invoicing offers advantages for businesses and governments alike. They highlighted that it improves accuracy, reduces manual errors, and streamlines financial operations, leading to faster payments and better cash flow. It was also recognised that RTR enhances transparency and helps tax authorities close the VAT tax gap by detecting fraud and non-compliance more effectively.

A significant number of respondents stated the importance of standardisation in effectively implementing e-invoicing, especially when aligned with international frameworks like Peppol. Standards were identified as an essential way to boost interoperability and reduce administrative burdens across borders, facilitating trade both across the UK and with businesses overseas.

Many respondents recognised that a decentralised model allows flexibility and innovation, while centralised systems offer stronger oversight and consistency. It was noted that for small businesses, automation can reduce costs and free up resources over the long-term, but only if implementation is supported with accessible tools and training, and potential financial incentives and support.

Some respondents noted that the transition to e-invoicing also presents challenges. Respondents highlighted that without adequate support, small and micro-businesses may struggle to adopt e-invoicing with barriers such as affordability, digital literacy, and infrastructure limitations. The government is committed to working closely with businesses, their representatives and advisors and the software sector to ensure that the e-invoicing regime facilitates the development of a diverse and competitive market, as we have seen for MTD. We are aware of several MTD providers who already supply e-invoicing services to UK based small businesses.

The broad range of views expressed by businesses, organisations, representative bodies and individuals provided valuable insights into the adoption and use of e-invoicing, as well as standardisation of the e-invoicing process. The government has used these insights to set its direction on e-invoicing at Budget 2025. An e-invoicing mandate supported by the right standards will unlock the benefits of this technology for UK businesses by creating the foundations for a wide network of users and a competitive market for software.

We continue to welcome stakeholder insights to help shape a strong and effective approach to e-invoicing that delivers real value to UK businesses. We intend to work closely with businesses of all sizes, representative bodies and tax professionals to develop the detail of the UK’s VAT e-invoicing regime to ensure that it delivers these benefits. If you are interested in participating in this work, please email the policy team.

We will begin conducting extensive stakeholder engagement from January 2026 to ensure stakeholder views and concerns are considered throughout the policy development process and can feed into developing both the roadmap and the full regime.

This ongoing and focused engagement aims to ensure the approach taken is effective and appropriate for business of all sizes, and in the best interest of the nation.

Annex A: List of stakeholders consulted

The government is grateful to the following individuals, businesses, organisations and the Welsh Government for responding to the consultation:

• The Association of Taxation Technicians
• Federation of Small Businesses
• BUFDG
• RSA Insurance Group Limited
• RSM UK Tax and Accounting Limited
• Stripe
• techUK
• Tradeshift
• Sovos
• KPMG
• UK Finance
• Veolia UK
• Vertex
• VAT In Industry Group
• Confederation of British Industry
• Moore Kingston Smith
• NHSFCA
• Causeway Technologies
• Price Waterhouse Coopers LLP
• Carson & Trotter Chartered Accountants
• Institute of Financial Operations & Leadership
• Institute of Directors
• Draper Accountants Limited
• Transpact.com
• OLYMPUS EUROPA SE & CO. KG
• EMR Group
• First B2B
• Tax Executives Institute
• LLoyd’s
• The ABI
• BDO
• Anglo American
• Aviva PLC
• Clifford Chance LLP
• London and International Insurance Brokers’ Association
• Data Tech International
• IATA
• Intuit
• ICC and International Centre for Digital Trade and Innovation
• LIDL Great Britain Limited
• Molson Coors Beverage Company
• The Boston Consulting Group UK LLP
• Gratte Brothers
• Association for Financial Markets in Europe
• Alvarez & Marsal Tax LLP
• British Chamber of Commerce
• Pearl Lily & Co Accountants
• The Institute of Chartered Accountants in England and Wales
• The Institute of Chartered Accountants of Scotland
• Chartered Institute of Taxation
• Chartered Accountants Ireland
• The Chartered Institute of Payroll Professionals
• Sage
• Centrica plc
• Chartered Institute of Credit Management
• Hays Plc
• UK eLab
• Deloitte
• Grant Thornton
• E.ON UK plc
• Odette
• Enterprise Nation and The Entrepreneurs Network.
• ELEMENTAL COSEC’S
• National Housing Federation
• Ernst & Young
• Association of Chartered Certified Accountants
• Low Incomes Tax Reform Group
• University College London
• KPMG
• Welsh Government

Annex B: Glossary of terms

Acronym	Full name and description
B2B	Business-to-Business — transactions from business to business
B2G	Business-to-Government — transactions to and from business and government
CTC	Continuous Transaction Controls — System that allows tax authorities to receive transactional data directly from businesses in real or near-real time.
DBT	Department for Business and Trade
EDIFACT	United Nations/Electronic Data Interchange for Administration, Commerce and Transport (UN/EDIFACT) — An international standard developed for electronic data interchange (EDI), approved and published by the United Nations Economic Commission for Europe (UNECE) in 1987.
ERP	Enterprise Resource Planning — Management software that can combine business processes such as HR, payroll, supply chain management into a single system.
EN16931	European standard on electronic invoicing — Semantic data model of the core elements of an electronic invoice
EU	European Union
GDPR	General Data Protection Regulation – European Data protection legislation.
HMRC	HM Revenue and Customs
HTML	Hypertext Markup Language — A standard language used to structure web pages.
JPEG	Joint Photographic Experts Group — A digital file format to store images that are compressed, allowing for effective sharing of digital images.
MTD	Making Tax Digital — Government initiative requiring businesses to use digital systems to keep tax records, submit tax data and make payments. The software used must be compatible with the Making Tax Digital system, or bridging software must be used.
OCR	Optical Character Recognition — a technology that uses automated data extraction to quickly convert images of text into a machine-readable format.
PDF	Portable Document Format — Electronic file format to view and exchange electronic documents. It is an open standard maintained by International Organisation for Standardisation (ISO).
PDF/A	Portable Document Format/Archival - specialised version of the standard PDF format designed specifically for long-term archiving and preservation of electronic documents) and email-based invoicing.
Peppol	Pan-European Public Procurement On-Line — A global network for the standardised exchange of electronic business documents.
RTR	Real-time reporting — the process of reporting tax information to tax authorities as transactions are made.
SDI	Systema di Interscambio — Italy’s mandatory e-invoicing system.
SME	Small and Medium-sized Enterprise — An enterprise that has fewer than 250 staff and less than £44 million in annual turnover or a balance sheet total of less than or equal to £38 million.
UBL	Universal Business Language — Open standard for electronic business documents and information models. Designed to facilitate information exchange between organisations.
UK	United Kingdom
VAT	Value Added Tax — A tax that is added to most products and services sold by VAT-registered business.
VAT Gap	The VAT gap refers to the difference between the amount of Value Added Tax (VAT) that is expected to be collected by a government and the amount that is actually collected.
ViDA	VAT in the Digital Age – A measure proposed by the EU to improve the VAT system by introducing real time digital reporting based on e-invoicing, update VAT rules and simplified VAT registration for businesses selling to consumer across the EU.
Four-corner model	A term initially coined by Peppol. An e-invoicing model where businesses exchange e-invoices through their service providers, allowing for interoperability and flexibility in e-invoicing systems.
Five-corner model	A term initially coined by Peppol. An e-invoicing model that builds on the four-corner model by introducing the ability for businesses to share information in real time, or close to real time, with the government authority (who act as the 5th corner). This is one way to incorporate RTR into a decentralised e-invoicing model.